Lukoil and Aeroflot agree on preferential fuel supply deal

Published: 9/23/1999

Reports suggest that Aeroflot has signed an agreement with Lukoil for the supply of jet fuel. Aeroflot intends to use Lukoil not only in Moscow, but also in the Russian regions and abroad. The primary motive for this type of deal in Russia historically has been to avoid the huge price differentials between Moscow, European Russia and the rest of the country in the internal aviation fuel market and to ensure reliable supply. Recently the problems within the Russian oil industry have caused particular difficulties in the Russian Far East (www.concise.org 20th August 1999) , where payment disputes between producers and refineries have slowed the delivery of crude to refineries and, in turn, of aviation fuel to airports. According to Aeroflot, the deal will reduce the dependence on intermediaries and bring lower fuel costs. The company also expects that the consolidation of its fuel sourcing may also result in volume discounts.

Article ID: 899